Oil market participants are also concerned that if the US Federal Reserve rolls back its monetary stimulus – a possibility next month – then liquidity on global markets will be reduced.

The higher expected supply of oil from the UK countered bullish news from China, where overall imports and exports in July beat analysts’ expectations, with crude oil imports hitting a record 6.15 million barrels per day.

Further decreases in crude stockpiles in top consumer the United States also had little positive effect. Inventories declined by 1.32 million barrels last week, according to the Energy Information Administration.

Brent crude fell $1.04 to $106.40 by 1445 GMT, having reached an earlier high of $107.86. US crude slid $1.27 to $103.10.

“The North Sea is one of the main drivers today … the increasing supplies are having an effect,” said Bjarne Schieldrop, an analyst at SEB.

Exports from the North Sea are scheduled to rise in September following maintenance.

“The oil market isn’t going to be as tight as expected in the third quarter – there aren’t any hurricanes on the horizon and politically things are quiet in the Gulf,” said Schieldrop.

Iran’s new president signalled willingness to negotiate with the West over Tehran’s disputed nuclear programme but Tehran-watchers say that window could close as each side waits for the other to make the first move.

But tightening supplies in major producers Iraq and Libya kept losses in check.

In Libya, workers’ protests remain a key concern. Output of its main crude oil grade, Es Sider, has been shut since Tuesday, along with the fields producing Amna and Sirtica, following strikes at the Es Sider and Ras Lanuf terminals.

Libya’s production is expected to fall further as workers at its Arabian Gulf Oil Company plan to progressively reduce output in protest over management changes and the company’s structure.

Also contributing to lower supply is Iraq where exports are set to fall sharply in September as major work is carried out at its vital southern export terminals.

In Yemen, the government said on Wednesday it had foiled a plot by al Qaeda to seize two major oil and gas export terminals and a provincial capital in the east of the country.